Presentation for the Joint BNB-IMF Seminar on Bulgaria’s Future Challenges “Bulgaria- From Transition to Convergence: The Challenges Ahead” May 2, 2007, Sofia by Dr. Georgy Ganev BMA, SUFEBA, CLS Structural Reforms: The Unfinished Agenda

Bulgaria and the IMF overview Relations started 17 years ago 4 unsuccessful and then 4 successful agreements between Bulgaria and IMF Many reforms implemented No more agreements deemed necessary, with good reasons, Yet this does not mean the reform agenda is done and over with Structural Reforms: The Unfinished Agenda Dr. Georgy Ganev Joint BNB-IMF Seminar, , Sofia

What reforms remain: framework The general idea of the IMF is for a country to have a sound economy This involves: –a certain structure of the economy, –a certain economic governance, –a certain macroeconomic policy mix There are serious reform items left in all three areas Structural Reforms: The Unfinished Agenda Dr. Georgy Ganev Joint BNB-IMF Seminar, , Sofia

What reforms remain: economic structure - 1 Some components of economic structure, just as an example for remaining issues: –Private property, which needs much more Secure property rights Privatization, as in energy, health, education, private provision of public goods –Competition, which needs more Deregulation Less protection Less exceptions, privileges, special treatments, caveats Structural Reforms: The Unfinished Agenda Dr. Georgy Ganev Joint BNB-IMF Seminar, , Sofia

What reforms remain: economic structure - 2 Some more components of economic structure, just as an example for remaining issues: –Physical capital, which needs more Infrastructure of all kinds –Human capital, which needs Education (initial and life-time) Health Incentives (as in the labor market) –Entrepreneurship Security of contracts Level playing field Structural Reforms: The Unfinished Agenda Dr. Georgy Ganev Joint BNB-IMF Seminar, , Sofia

What reforms remain: economic governance Some components of economic governance, just as an example for remaining issues: –Better regulation, including Clearer motivation and definitions Both ex ante and ex post regulatory impact assessment Much more clear rules for rule-making –Better administrative services, especially Timely, with explicit deadlines Consistent, ergo predictable One-stop shop –Possibly most important, and also relevant for the next slide, fundamental reform the the expenditure side of the budget Structural Reforms: The Unfinished Agenda Dr. Georgy Ganev Joint BNB-IMF Seminar, , Sofia

What reforms remain: macroeconomic policy mix Some components of macroeconomic policy, just as an example for remaining issues: –Lower taxes –Less distortionary tax structure –More competition as a policy towards inflation under a Currency Board –Preparation for the eventual return to potent monetary policy as a member of the Eurozone –Programmatic budgeting Structural Reforms: The Unfinished Agenda Dr. Georgy Ganev Joint BNB-IMF Seminar, , Sofia

Conclusion A lot has been done, usually the hard way A lot remains, there should be no illusions Reform is an endless agenda EU money cannot substitute for political will A general vision about Bulgarian society and its participation in the common economic space of Europe is a sine qua non While the IMF and the EU have been and will be eager to help, the generation of such a vision is the sole responsibility of the Bulgarians Structural Reforms: The Unfinished Agenda Dr. Georgy Ganev Joint BNB-IMF Seminar, , Sofia